Could “death of distance” help angel investors fill post-COVID startup funding gap?


Funding into African tech startups is likely to be hit by the economic impact of COVID-19, but the “death of distance” also caused by the pandemic could help angel investors fill the gap.

Last month’s virtual Africa Tech Summit Connects event brought together African angel investors to discuss how angels can help fill the expected post-COVID funding gap in the African tech space, as well as their importance to startups beyond simply providing finance.

Stephen Gugu, co-founder of the Nairobi-based ViKtoria Ventures, said angel networks could help in filling part of any funding gap, adding that there were lots of new businesses being founded in the wake of the pandemic, meaning lots of opportunities for those with capital to deploy.

“During this period we have seen so many deals coming our way, and angels that have capital have been active in putting in cash,” he said.

Mariam Kamel, manager of AUC Angels, said her angel network had seen a surge in membership in the weeks following the COVID-19 lockdown in Cairo.

“Our network went from 35-40 members up to 60, in a very short period of time,” she said. 

“There was a lot more interest in general in the space; more people sitting at home exploring different opportunities. With time, spending behaviours change, particularly for high net worth individuals. What they could spend on travel, shopping, things of that sort, weren’t necessarily happening as much, and so there was excess capital that they were looking to invest elsewhere.”

This was coupled with plenty of opportunities, especially with startups in areas like food delivery and telemedicine.

“There were a lot of startups seeking investment, particularly in the low touch economy,” she said.

Tomi Davies, president of the African Business Angels Network (ABAN), said angel investors were certainly becoming more active on the continent.

“Valuations have gone down, but transactions have gone up,” he said.

Kamel, however, sounded a note of caution, saying many of her new members, for example, were there to explore, not necessarily to deploy capital.

“And the people that had the deeper pockets are a lot more conservative than they used to be, so let’s not paint a completely rosy picture of the situation,” she said.

Gugu said some angel investors had also been hit by the economic impact of COVID-19.

“In Kenya we have a lot of investors that are active in the real estate space, and especially commercial real estate. And this has been very tough for them,” he said.

Yet the “ new normal” of online pitching and virtual conferences has helped angel groups access Africans living in the diaspora, Kamel said, giving them more direct access to opportunities they would previously have needed to be physically present for.

“For our part we have to spread the word, and provide access. One of the advantages of COVID-19 is that borders and boundaries mean a lot less than they used to. And this is particularly the case for angel investments,” she said.

Davies agreed.

“COVID has caused the death of distance as we’ve all moved online, and that has given us the opportunity to engage high net worth individuals into the world of angel investing,” he said.

Yet the value of international angels was limited, Gugu said, unless it could be married with local expertise.

“Angel investment, at least in my experience, is very much a local sport. Because you not only want to put money into startups, but you also want to make sure you are adding value in terms of your connections, your networks, the mentorship that you can provide,” he said.


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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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